THE ROLE OF ACCOUNTING IN FINANCIAL TRANSPARENCY

CASE STUDY:   UGANDA NATIONAL BUREAU OF STANDARDS

ABSTRACT

The topic of study was the role of accounting in financial transparency. The study was guided by the following objectives; to examine the various ways of ensuring transparency at UNBS, to evaluate the challenges of accounting in UNBS and to discuss the other factors affecting accounting operations in UNBS.

The research used a cross sectional design, qualitative and quantitative design. The researcher used the above methods because many aspects were covered in the study concerning the effects of Role of internal auditing on organizational performance.

The study carried out in Uganda National Bureau of standards. The study used purposive sampling technique in selecting the respondents because this technique is cheaper and 40 employees was selected from the total population of UNBS employees.

The results indicates that the various ways of ensuring transparency include;  ensuring Integrity among employees in an organization , Setting clear objective goals among all employees in an organization is essential in ensuring transparency, Encouraging professional competence among employees is key in the enforcing of transparency in an organization, keeping an organization financial records confidential is key in enforcing transparency in an organization and Ensuring that all employees in an organization follow the rules.

The results also indicates the following challenges include; Conflict of interest among organizational employees by organizations, Lack of job security among employees affects effectiveness of the system, poor record keeping of organizational records, poor payments of accounting employees and Poor payments of accounting employees are one of the critical challenges facing accounting employees at UNBS.

The findings also indicates that the following are the factors affecting accounting operations and they include; adoption of ethical standards , Poor working environment for accounting staff, Lack of required computers and software to perform accounting tasks, Poor risk assessment of organizational activities  in an organization and poor monitoring and evaluation.

The study recommends that organizations should ensure that there is integrity and objectivity amongst employees to enable them adopt ethical standards in organizational operations.

Organizations should also ensure that there is proper record keeping, limited political influence in organizations activities to encourage efficiency in accounting operations.

The study recommends the following areas for further study; Influence of technology in accounting efficiency, challenges with manual systems of accounting and Benefits of employee motivation on performance.

CHAPTER ONE

INTRODUCTION

1.0 Introduction

This chapter presents the Background, statement of the problem, purpose of the study, objectives of the study, research questions, scope of the study, Significance of the study, and operational definitions of key concepts.

1.1 Background to the study

The complexity and volume of organization competition has drastically increased globally in the recent years. Some of the causes that can be attributed to this include globalization, out sourcing, intense competition for existing markets as well as complicated and numerous partnership. Over the last fifty years many, of the world’s largest firms have advanced from being simple manufactures of hard goods, or providers of basic services, to being sophisticated vendors using advanced accounting models. This means that commitment of organization management and stake holder towards ensuring that transparency in the accounting operations is achieved is paramount (Krappe and Kallayil, 2003).

Financial Transparency in accounting operations covers vast areas of organizational activities and departments including storage of organizational raw materials , financial management , record keeping, ware housing , and human resource management  and with constant need by different organizations to achieve efficiency in accounting operations company have adopted technical standards using advanced technology like wireless technology, telecommunications, and intelligent systems,  (Huang et al, 2012).

Standards in accounting operations is fast becoming one of the main drivers of change, posing new organizational opportunities and impacting on its strategic challenges (Somuyiwa, 2010). The business environment today has been undergoing unprecedented change and many companies are seeking new ways to stand out from the competition by sustaining their competitive advantage. In today’s highly competitive global marketplace, the pressure on organization’s to find new ways of creating and delivering value to customers is growing stronger, therefore advancement in accounting operations in organizations is imperative to achieve a big market share and reduce costs in organizational operations, (Oyesiku et al, 2010).

Financial transparency acts as an essential part of the economic and non-economic activities which leads to decide the efficient procurement and utilization of finance with a profitable manner. Nowadays, financial transparency has been enlarged with innovative and with dimensional functions in the field of business with the effect of industrialization. Financial Transparency deals with the procurement of funds and their effective utilization in the business and the preferred practices are applied at different decision making organizational levels; institutions can achieve resource utilization (Babar and Ahmed, 2010).

Financial transparency is directly related with various functional departments like personnel, marketing and production. Financial managers must make proper use of financial management in planning, allocation and control activities of the organization (Horne, 2000).

The scope of financial management involves financial management and economics, financial management and Accounting which includes accounting records like financial information of the business, financial management or mathematics, financial management and production management, financial management and production, financial management and marketing, financial management and human resource. Financial transparency t helps in financial planning in an important aspect of business concern, helps in acquisition of required funds and proper use of funds. It also takes sound financial decision in the business concern. Financial decision will affect the entire operation of the concern because there is a direct relationship with various department functions such as marketing, production, personnel and departments of organizations’ sector including new financial management (Hood, 2001).

According to Ogbonna, (2010), financial transparency are essential in not necessarily violating the rules of the organization or infringe the law of the organization but enables in maintaining organizational principles in timely reaction to customers’ needs, proper financial management , increase on organizational efficiency and better management in organization resources.

Nwagboso (2008) argues that ethics or morality as matters of good and evil, right and wrong and drives the society and he further states that organization were employees follow proper organization ethics tend to achieve high organizational performance and in turn the performance of staff.

According to Brown (1998), financial accountability is the assessment of value for money and acceptance by individuals of personal responsibility for their actions in relation to quality of their outputs and decisions. Practically, all approaches adapted to getting health systems perform better through partnerships and increased competition in service delivery emphasize accountability as a core element in implementing health reform/improving system performance  (Ndamenenu ,2011).

Internal Auditing are put in place to keep organization on course towards profitability goals and achievement of its mission and to minimize surprise along the way. They enable management to deal with rapidly changing economic and competitive environment, shifting customer demands and priorities and restructuring for future growth. Internal controls promote efficiency, reduce risks of asset loss and help to ensure the reliability of financial statements and compliance with laws and regulations Organization of the Tread way Commission (COSO, 2011).

Transparency in accounting in the modern business environment are very beneficial to achieve economic advancement, of organization faster operations in transactions and easy to a company’s financial documents. Having a supportive computerised accounting system is very important to maintain the company’s competitiveness and efficiency in accounting operations (Sarkis, et al, 2004).

1.2 Statement of the problem

Accounting function in an organization is imperative in enabling the organization reduce costs, determine its profitability and mitigate failures this helps an organization to achieve its goals and over competition. According to Ndamenenu (2011) when an organization ensures that there is financial transparency its able to devote all its resources and achieve the targets set by share holders.

However Ugandan companies especially parastals like UNBS HAVE FACED challenges in the transparency OF its accounting function something that has made the organization to fail to achieve some of its targets this has generally to poor performance of the organization in addition to that UNBS PDU annual report, (2012) indicates over 200 awarded contracts in financial year 2011/2012 but the levels of service received/delivered on most of these contracts remain unknown. Mubangizi (2013) reported high complaints of poor quality products/services delivered with30% contracts cancelled, 5% of contracts either not delivered at all or received in part, 10% deliveries made over the stipulated delivery period and 60% of the contracts performed paid after 30days stipulated payment period, high priced goods/services and missing contract management documents among other issues. The persistent high complaints in service delivery in UNBS warrant examining the role of accounting in financial transparency.

1.3 Purpose of the study

The study aimed at establishing the role of accounting in financial transparency.

1.4 Specific objectives of the study

The overall objectives of this research were;

1. To examine the various ways of ensuring transparency at UNBS.
2. To evaluate the challenges of accounting in UNBS.

• To discuss the other factors affecting accounting operations in UNBS.

1.5 Research questions

The following research questions guided the study;

1. What are the various ways of ensuring transparency at UNBS?
2. What are the challenges of accounting in UNBS?

• What are the other factors affecting accounting operations in UNBS?

1.6 Scope of the study

The scope of this study was divided into subject, geographical and time scope.

1.6.1 Subject scope

The study specifically looked at, to examine the various ways of ensuring transparency at UNBS, the challenges of accounting in UNBS and the other factors affecting accounting operations in UNBS.

1.6.2 Geographical scope

The researcher considered UNBS regional offices; UNBS headquarters in Nakawa and UNBS offices in Kanjokya.

1.6.3 Time scope

The study covered a period of five years from 2014 to 2018.

1.7 Significance of the study

The study will help the government in analysing the benefits of ethics in accounting.

The study will help the management in establishing the Relationship between technical standards and accounting efficiency.

The study will also help the management in identifying factors that affect accounting efficiency in an organization.

Local government: The study will benefit local government in understanding the importance of ethics in accounting.

Future Researchers, the study will help future researchers with basic facts of importance of ethics in accounting.

1.8 Definitions of key terms

Accounting

This refers to the method of calculating the company records including sales, revenue and profitability.

Financial transparency

This refers to the ability of an organization to carry out its financial records in a responsible and legal manner.

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

This chapter discusses the study in line with study objectives according to various scholars.

2.1 Various ways of ensuring transparency in an organization

Integrity, this is the quality of being honest and having strong moral principles. It implies not merely honest but fair dealing and truthfulness. This principle of integrity imposes an obligation on all accountants to be straight forward and honest in professional and business relationships, (Derek, 2000).

Objectivity, The principle of objectivity imposes the obligation on all professional accountants to be fair, intellectually honest and free from conflicts. Thisprinciple requires four basic needs of credibility, professionalism, quality of service and confidence, (Reena et al, 2009).

Professional competence, A professional accountant, in agreeing to provide professional services implies that he is competent to perform the services. Accountants should refrain from agreeing to perform professional services which they are not competent to carry out unless competent advice and assistance are obtained, Posti (2005).

Confidentiality: A professional accountant should respect the confidentiality of information acquired during the course of performing professional services. They should not use or disclose any such information without proper and specific authority, Dems (2010).

Interpretations of Rules of Conduct consist of interpretations which have been adopted, after exposure to state societies, state boards, practice units and other interested parties, by the professional ethics division’s executive committee to provide guidelines as to the scope and application of the Rules but are not intended to limit such scope or application. A member who departs from such guidelines shall have the burden of justifying such departure in any disciplinary hearing. Interpretations which existed before the adoption of the Code of Professional Conduct on January 12, 1988, will remain in effect until further action is deemed necessary by the appropriate senior technical committee.

Ethics Rulings consist of formal rulings made by the professional ethics division’s executive committee after exposure to state societies, state boards, practice units and other interested parties. These rulings summarize the application of Rules of Conduct and Interpretations to a particular set of factual circumstances. Members who depart from such rulings in similar circumstances will be requested to justify such departures. Ethics Rulings which existed before the adoption of the Code of Professional Conduct on January 12, 1988, will remain in effect until further action is deemed necessary by the appropriate senior technical committee.

As a quality of financial report is referred to as the capability of making a difference in the decisions made by users in their capacity as capital providers, (IASB, 2008). Drawing on prior research, relevance is operationalized using four items referring to predictive and confirmatory value. Many researchers have operationalized predictive value as the ability of past earnings to predict future earnings (Francis et al., 2004). Confirmatory value to the relevance of financial reporting information if it confirms or changes past (or present) expectations based on previous evaluations (IASB, 2008).

Faithful representation is the second fundamental qualitative characteristic in the standard. To faithfully represent economic phenomenon that information must be complete, neutral, and free from material error. Faithful representation is measured using five items of neutrality, completeness, freedom from material error, and verifiability (Willekens, 2008).

The first enhancing characteristic, understand ability, will increase when information is classified, characterized and presented clearly and concisely. According to IASB (2008), understand ability is when the quality of information enables users to comprehend their meaning. Courtis (2005) argues that understand ability is measured using five items that.

Proper Record keeping, when the there is proper record keeping in an organization This is to blame for most of procurement fraud in the developing countries, maintaining a proper records of providers is vital and when organizations do not maintain a record of their providers they are prone to fraud (Farrington et al, 2006).

2.2 Different Challenges of accounting

Conflict of interest, Hansen et al, (2005) noted that during accounting. An employee might not disclose a conflict of interest concerning a certain service provider. For example, the employee might award a contract to a relative’s company. This hidden interest is not in the interests of the organization. An employee might receive kickbacks from suppliers in exchange for approval to either order from or make a payment to them, when goods have not been fully supplied or are charged at a higher price. They added that Staff from the donor organization can be bribed by an entity manager, so that during the monitoring process some instances of non-compliance are ignored.

Lack of job security, in some countries working for an organization is an admirable and attractive occupation, but in others it is no longer as gratifying as it used to be. There are a number of reasons for this, ranging from restrictive legislation targeted at organization, single party autocratic government, donor fatigue and the presence of civil strife. Most employees working in such environments are tempted to engage in fraudulent activities, as they cannot make personal plans beyond the next two years at most. Most organizations operating in difficult environments have strategic plans ranging from six months to a year, and so the staff contracts may vary with the organization’s planning strategies. Organizations generally employ younger people who may be starting families, or who have young families, and need financial security, (Daveas, 2006).

Rationalization, According to Chikanza et al, (2005) Rationalization also leads to fraud. An employee may commit fraud but still invent a rational explanation as to why the fraud has been committed. This “rationalization factor” encourages the perpetrator to continue committing the fraud. These are some ways in which individuals may rationalize their actions:-  “Some people do it, so why should I not do it too.” “I will pay back the organization later or I will stop soon since this is only temporary.” “I get so little, but I work so hard, this organization owes Me.” leading to fraudulent acts in the organization

Poor record keeping, This is to blame for most of procurement fraud in the developing countries, maintaining a proper records of providers is vital and when organizations do not maintain a record of their providers they are prone to fraud (Farrington et al, 2006).Procurement officers should be encouraged to maintain proper record keeping and management to provide bases for tracking fraudulent procurement and procurement entities should provide conducive environment that should be supported by trained skilled and professional experts. The reports add that non-compliant officials should be prosecuted in courts of law. (PAC Reports, 2009-10).

Low staff remuneration, According to, (Rene Hansen et al, 2005), payment can influence fraud in several ways; Staff and external suppliers can be involved in this fraud when obtaining refunds for cancelled workshops, membership and subscriptions, or overpayment for services. Employees can design schemes whereby they duplicate payments to vendors and only deliver one cheque, converting the other to cash. This involves cheque forgery, altering payee amounts or creating duplicate or counterfeit cheques.

Chikanza et al, (2005) asserts that poor payment of employees leads to employee revenge against the organization due to being overlooked for advancement, overworked, in order for them to gain from other sources making them to act in fraudulent manner, leading to fraud.

According to Luway Mongie and Bowman Gilfillan (2009), civil society organizations, believe that they are activists who are not concerned about monetary gain. Employees of organization are engaged with changing the social status of human kind and empowering them with human rights education so that they make informed decisions and choices. With the current change in the economies and political dispensation of many countries, the cost of living is soaring and the risk associated with human rights activism is now too great so that staff feel the need for market related remuneration. Unfortunately most organizations in developing countries are unable to pay attractive salaries, particularly to local staff. Weakens the financial position of organization, as programs are abandoned midway and in some instances staff can go without salaries.

Influence of politicians, in procurement is to blame for procurement fraud in most organization, According to the Global integrity report 2008, it has been noted that although there are penalties, Procurement process especially big procurement contracts tend to involve high profile politicians, who influence the process & therefore usually protect the individuals who may be implicated. The regulations are in place but not effective due to the influence assumed by procurement personnel and how they manipulate the system to attain their own ends (IGG reports, 2010). According to report on the newspaper (Daily Monitor Monday 23 may 2011), Uganda revenue authority (URA) noted that the government is losing revenue as a result of organized crime between staff of the institution and officials of clearing and forwarding firms. Ms Sarah Kasheka.

Corruption, is one of the main proposed causes of procurement fraud, The government of Uganda in its National Strategy to fight corruption and rebuild ethics and integrity in Public Office (2004–2007) launched in July 2004, recognizes that corruption in public procurement and service delivery poses a serious obstacle to economic and social development in Uganda.

Limited procurement skills, amongst the procurement staffs, has led to fraud in most parts of the world , procurement profession is a relatively new profession unlike accountancy , medicine , law and so most parts of the world still lack qualified procurement profession , this limited skill has caused fraud in most institutions around the world, (lysons, 2006).

Ntayi (2005) has noted that procurement operations require experts to carry out public procurement at the private and public sector levels. The PPDA as the regulatory public procurement body should provide enough personnel to carry out the function.  Besides, there should be training to provide knowledge and skills of the scope and dynamics of public procurement as required by the (PPDA Act, 2003)

Weak punishment, given to culprits, is normally the reason why most of the culprits continue practicing fraud since the value of fraud is greater than the punishment to be given to the offenders, in Singapore and china the punishment to fraud criminals is normally by death penalty this helped Singapore eliminate corruption completely and china’s score in the scale of 1-10 also improved greatly (transparency international, 2006).

Weak laws by the government, is to blame for the rampant fraud , most government across African continent have weak laws governing procurement , since procurement department in most countries is seen as a new field so the government have not taken much responsibility in developing it. (Transparency international, 2006).

Lack of role models, Most of African leaders are corrupt and they have amassed a lot of wealth from corruption, therefore this has made even the organizational workers to be corrupt themselves.  According to (national fraud authority, 2004) billions of taxpayers’ money in African continent is lost in corruption.

Motives, According to Thembile et al, (2005), an employee may come under extreme financial stress, if she or he has health problems or family members are chronically ill. An employee may desire to solve a need or seek to attain a certain lifestyle. Possibly there may be gambling or alcohol-related problems. Unfortunately the manager cannot do much about such motives, but it is important that they are identified. Internal motives emanate from the workplace if an employee feels they are being underpaid, are unfairly treated in an appraisal interview, are given high volumes of work, leading to stress, and an employee perceiving that promotions are based on work politics and not performance, this may lead to fraudulent act.

According to Joseph R. Dervaes (2006), internal motives emanate from the workplace if an employee feels they are being underpaid, are unfairly treated in an appraisal interview, are given high volumes of work, leading to stress, and an employee perceiving that promotions are based on work politics and not performance, this may lead to fraudulent act.

Motivation and revenge, Motivation is another critical element. It includes financial need, challenge, and revenge. When the trusted employee has a financial need in their life, the motivation factor kicks in to permit the individual to perform an illegal act (Joseph R. Dervaes 2006).  Joseph R. Dervaes (2006) asserts that, the financial need can be either real or perceived (i.e.; greed). They become desperate and see no other alternative to solve their financial crisis. Sometimes this is the most visible element of change in a person’s life actually observed by fellow employees in the office. But, sometimes the individual commits fraud by exploiting the organization’s computers, accounting systems, and internal controls as a challenge. Breaking the organization’s codes and passwords is perceived as a game. The most dangerous person is one who seeks revenge against the organization. This wayward employee seeks to financially destroy the organization in retaliation for the poor treatment they’ve received in the past. Employees who have lost their jobs, been passed-over for promotions, or who did not receive a raise fall into this category.

2.3 Other factors affecting accounting operations

Control Environment, Anthony (2004) noted that control environment sets the tone for the organization, influencing the consciousness of its people. It is the foundation for all the other components of internal controls. Success (2004) states that control environment is the consciousness of the organization, thus, the atmosphere that compels organizational members to conduct their activities and responsibilities as per the laid down control objectives. According to Lower (1998), an effective control environment is where competent people understand their responsibilities, the limits to their authority, and are knowledgeable, mindful, and committed to doing what is right and doing it the right way. Jenny and Pamela (2006) assert that “a governing board and management enhance an organization‟s control environment when they establish and effectively communicate written policies and procedures, a code of ethics, and standards of conduct”.

Control Activities, Craig (1999) states that control activities are the administrative and supervisory actions that management engages in to keep the organization focused and cautious in addition to keeping members effective and efficient at task execution. Dublin (1999) considers control activities as activities that provide evidence that a loss has occurred. They include; analysis, reconciliations, and reviews. He emphasized the importance of authorizations in the form of expenditures as a result of an approved budget as a control activity. Approval of budget expenditure should involve questioning of unusual items, justification of the transaction and review of source documents (Van Horne, 2002). Control activities are actions supported by internal control objectives, procedures and policies that enable managers to address risk timely, effectively and efficiently (Steeves, 2004).

Risk Assessment, COSO (2004) considers risk assessment as the process of identifying and analyzing of relevant risks to the achievement of the entity‟s objectives and determining the appropriate response. It includes risk identification from external and internal factors, at the entity and the activity levels, risk evaluation, assessment of risk appetite of the organization and the developing responses of all the risks in the organization. There are four types of responses to risk which must be considered; transfer, tolerance, treatment, or termination. The appropriate controls can be either preventive or detective. According to Jenny & Pamela (2006), risk assessment refers to the identification and analyzing of relevant risks to the achievement of objectives, forming a basis for how the risks should be managed.

Information Flow,  ACCA (2005) considers information flow as a process through which the right organizational members receive the right information at the right time. Here, formal and informal channels information flows are noted. Formal channels comprises of downward or top down, upward or bottom up and horizontal or lateral forms. The informal channels comprises majority grapevine. It is further noted that for information to achieve its intended purpose, it must be identified, captured, processed and communicated in an authentic, useful and timely manner. In addition, the information communicated must be reliable, accurate, complete, specific, understandable, directed to the right people and relevant to the intended users.

Monitoring and Evaluation, The Institute of Internal Auditors (1995) considers monitoring to encompass activities such as periodical evaluations, Internal audits and management self assessments. COSO (1998), Dublin (1990), Magala (2001) and Lary (2009) view monitoring as needed to ensure that planned administrative, operational and financial tasks and activities are carried out in a timely and proper manner such that set internal control objectives and organizational performance are achieved. Monitoring aims at determining whether organizational members are carrying out or have carried out their tasks efficiently and effectively as required by the organization‟s policies (Spillane, & Reimer, 2000).

Accountability,  Accountability is the liability that one assumes for ensuring that an obligation to perform a responsibility is fulfilled (Frost, 2000).Accountability means being able to provide an explanation or justification and accept responsibility for events or transactions and one‟s own actions in relation to these events or transactions (KIkonyogo, 1999). Munene (2004) stressed that accountability can be analyzed at the individual, organizational, and general levels. In his view, accountability is like a Semantic tree: the trunk is governance; a main branch is financial accountability which feeds other branches like budgeting, accounting, auditing, and records management.

Compensation is one of the primary reasons for employees to seek employment. They are rewarded for their services and efforts that they exert for their organizations. They can be compensated in many ways for example salaries, holidays, bonuses etc. There are two basic compensation models; performance based pay and components based pay. In the former paradigm, employee’s compensation is either tied to the way he performs; if he performs better he would be rewarded accordingly (performance based pay) and on the other hand, non performance based pay; where, employee’s performance is not tied to getting rewards, rather the employee is paid or rewarded even if its performance is not up to the mark for example fixed pay and salaries (Taylor, 2005).

The relative importance of various factors used to measure the performance of employees should be related to how well each measure informs the principal about the employee`s actual performance (Lambert and Larcker, 1987; Banker and Datar, 2013). For decade`s employees measure have been used as primary indicators of managerial performance with prior research documenting a significant relation between employees based performance and financial compensation (Antic and Smith, 1986, Ittner, et at., 2013). Moreover, both the annual cash bonus and the sum of the cash bonus plus stock based compensation have been linked to employees based performance as well as numerous other attributes of the firm’s governance structure (Core, et al, 2011).

Plans provide a sense of directions by focusing the attention on specific targets and direct employee efforts towards important outcomes (Draft,1991) through goal setting and planning, managers learn what the organization is trying to accomplish. They can make decisions to ensure that internal policy, roles performance structure, products and expenditures will be made in accordance with desired outcomes.

Koontz (2002),inclines that some employees may not be able to cope with the changes that occur at work. Equipments may change or the type of work can change in an organization. This can make the employee unable to adapt. Adequate training is necessary to help the employee to cope and be able to perform better. The type of work in an organization may also involve a sense of compassion. This is especially true when the organization deals with people. People who tend to be aggressive by nature may find conflicts in the situation. Good performance may be affected, not because of lack of ability or interest, but by conflict of values (Stoner et al , 2002).

Cole (1997) , revealed that some people are highly sensitive to the environment and the climate. These should be conducive for work; otherwise even good performers can also become poor performers. The work situation and environment should be adequately modified to help the employees have better working conditions.

CHAPTER THREE

METHODOLOGY

3.0 Introduction

This chapter presents the methodology which consists of the research design, area of study, study population, sample population and selection, sampling technique, data collection method, data quality control, data collection procedures and limitations of the study.

3.1 Research design

The research used a cross sectional design, qualitative and quantitative design. The researcher used the above methods because many aspects were covered in the study concerning the effects of Role of internal auditing on organizational performance.

3.2 Study population

The study carried out in Uganda National Bureau of standards.

3.3 Sampling design

The study used purposive sampling technique in selecting the respondents because this technique is cheaper.

According to Amin, (2003) purposive sampling technique is a type of no probability sampling in which not every element of the population has an opportunity of being selected for the sample; the sample is not representative of the population and generalizations cannot be made to the population.

3.3.1 Sample size and determination

Mugenda and Mugenda (2003), argue that it is impossible to study the whole targeted population and therefore the researcher took a sample of the population. A sample is a subset of the population that comprises members selected from the population. Using Krejcie and Morgan’s (1970) table for sample size determination approach, a sample size of 30 employees was selected from the total population of UNBS employees.

Simple random sampling technique will be used.

Table 1 below shows the summary of the sample size of the respondents and the sampling techniques that were used in the study.

Table: Sample size of the respondents

            Source: primary data

3.4 Data source

The type of data were from both primary and secondary.

• Primary data

This data obtained from the questionnaires administered on the target respondents to gain opinions and practices on the role of accounting in financial transparency.

• Secondary data

Is data which has been collected by individuals or agencies for purposes other than those of a particular research study. It is data developed for some purpose other than for helping to solve the research problem at hand (Bell, 1997). Secondary data sourced because it yielded more accurate information than obtained through primary data, and it is also cheaper.

3.5 Data Collection methods

The major instrument for data collection were questionnaires. Surveys were just one part of a complete data collection and evaluation strategy. The major method of data collection for the study were the survey, which was done using selected instruments like questionnaires. The questionnaire provided respondents with ample time to comprehend the questions raised and hence, they were able to answer factually.

3.6 Research Instruments

The study used the Questionnaires and interview guide as the main research instrument during the course of data collection.

3.6.1 Questionnaire

The questionnaire was used to collect quantitative data. The researcher administered the questionnaires to respondents in different departments including, finance, procurement and senior management, which was designed basing on study objectives and questions. Respondents read and answered the questionnaires themselves. The questionnaires were close ended and was considered convenient because they were administered to the literate and its anonymous nature fetched unhindered responses.

The questionnaire was used because it is saves time and it’s easy to administered, however the research instrument also has disadvantages since it can only be administered to respondents who can read and write.

3.6.2 Interview Guide

Qualitative data was collected from the informants using interviews. The interview guide was structured. The interviews were held with management of UNBS, and took approximately thirty to sixty minutes. These were used since it is the best tools for getting first hand information /views, perceptions, feelings and attitudes of respondents. Both formal and informal interviews were used to get maximum information from the different respondents to participate in the research.

The study used the interview guide because this technique could be administered to both the literate and illiterate and it also helps in getting a deeper understanding of the facts under study, however though its has such advantages this technique also has disadvantages in that it can takes a lot of time and therefore it cannot be used for a large population of respondents.

3.7 Data quality control

The data a collection tools were pre-tested on a smaller number of respondents from each category of the population to ensure that the questions are accurate clear and in line with each objective of the study.

3.7.1 Validity of the instrument

It is the degree to which results obtained from the analysis of the data actually represents the phenomenon understudy, (Mugenda&Mugenda, 2003).  To ensure validity of instrument close guidance of the supervisor were adopted. This helped to identify ambiguous questions in the interval and be able to re-align them to the objectives.

3.7.2 Reliability of the instrument

Reliability tests and analysis were carried out.

Reliability is the extent to which the measuring instrument produces consistent scores when the same groups of individuals are repeatedly measured under the same conditions (Amin, 2004).

3.8 Research  procedures

Upon receiving the University permission to carry out research, the area of study will be visited for purposes of familiarization.  The researcher sought permission from staff and once allowed to proceed with research, questionnaires were issued and interviews were carried out with the selected staff.

3.9 Data analysis, interpretation and presentation

The raw data was coded, edited, and arranged ready for analyzing only completed raw data was be analyzed using statistical packages like excel and SPSS and data was presented in form of tables, pie charts and bar graps.

3.10 Ethical issues and ethical consideration

Ethics approval was sought and obtained from the ethical review committee of Kyambogo University for the commencement of this research. A written permission to carry out the research was obtained from the Human resource manager of Uganda National bureau of standards. Verbal consent was also be sought from the respondents.

3.11 Limitations of the study

The researcher faced the following challenges in the course of the study;

• The researcher didnot get enough time to interview all the respondents, but this was solved by budgeting for the time appropriately.
• The researcher also faced challenges in language as other respondents’ felt uncomfortable expressing themselves in local languages like luganda.
• Other respondents asked for money from the researcher, this did not affect the study as the respondents were persuaded that the research is meant for academic purposes.

CHAPTER FOUR

PRESENTATION, ANALYSIS, INTERPRETATION

OF FINDINGS

4.0 Introduction

This chapter presents the results in reference to objectives in chapter one. Gender of    respondents, Age of respondents, education level of respondents, to examine the various ways of ensuring transparency at UNBS, to evaluate the challenges of accounting in UNBS and to discuss the other factors affecting accounting operations in UNBS.

4.1 Presentation of findings

Showing gender of respondents

Table 2 :Showing gender of respondents

Source: Primary Data

Graphical representation of gender of respondents

According to table and the figure above the findings in the study it is evident that (64%) representing (19) of the respondents were male while (36%)representing (11) of the respondents were female, from the above findings it is evident that majority of the respondents in UNBS were male, this findings implies that male gender accepted to respondents to the questionnaires asked by the researcher. The results further specifically showed that the male gender had better knowledge regarding the topic of the study therefore they were able to answer the questions asked in the questionnaire, it also helped the researcher get  the right information from well informed respondents without the need to explain to them how to answer the questions.

Duration respondents have worked

Table 3 : Showing duration of respondents in the organization

Source: primary data

Source: Primary Data

According to the results in the study, most of the respondents (40%) had had worked for 6-8 years, (22%) worked for 3-5 years, (16%) worked for 9 years and above and only (22%) worked for 0-2 years, this results implies that most of the respondents are well conversant with the operation of UNBS and therefore they were able to give correct answers due to their experience with the organization.

Table 4: Showing educational level of respondents

Source: Primary Data

Finding showing educational level of respondents

Source: Primary Data

According to the findings in the study (54%) of the respondents hold degrees, (20%) of the respondents were diploma holders, (16%) of the respondents were master’s degree and (10%) of the respondents were certificate holders, from the results in the study above it is evident that most of the respondents were degree holders . This finding therefore shows that the researcher easily got reliable information because the respondents were well educated and could understand the questions asked without much explanation.

Various ways of ensuring transparency

Table 5: Various ways of ensuring transparency

Source: primary data

According to table the results in the study (32%) of the stated that ensuring Integrity among employees in an organization is one of the main ways of ensuring transparency in an organization, (18%) stated that Setting clear objective goals among all employees in an organization is essential in ensuring transparency in an organization, (12%) stated that Encouraging professional competence among employees is key in the enforcing of transparency in an organization, the findings further show that (18%) of the respondents stated that keeping an organization financial records confidential is key in enforcing transparency in an organization and the remaining (20%) asserted that Ensuring that all employees in an organization follow the rules  these results further demonstrates that an organization needs to enforce transparency.

Challenges of accounting in UNBS

Table 6 : Showing challenges of accounting in UNBS

Source: Primary Data

Regarding results on Conflict of interest among organizational employees by organizations(20%)states that this one of the challenges facing accounting in UNBS, (22%) of the respondents state that Lack of job security among employees affects effectiveness of the system, (18%) stated that it is a poor record keeping of organizational records, (20%) indicates that poor payments of accounting employees and the (20%) of the respondents further state that Poor payments of accounting employees are one of the critical challenges facing accounting employees at UNBS.

Other factors affecting accounting operations in UNBS

Table 7: Showing how other factors affecting accounting operations in UNBS

Source: Primary Data

On the question regarding how organizations ensure adoption of ethical standards the table above reveals that (34%) of the respondents stated that Poor working environment for accounting staff, (28%) of the respondents assert that Lack of required computers and software to perform accounting tasks, the results further indicates that (28%) of the respondents stated that Poor risk assessment of organizational activities  in an organization , while only (24%) of the respondents stated that Poor monitoring and evaluation, from the above results the findings show that Poor working environment has a big influence on the performance of accounting staff at UNBS.

CHAPTER FIVE

DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS

5.0 Introductions

This chapter presents the discussion, conclusions and recommendations.

5.1 Discussion

5.1.1 Various ways of ensuring transparency

The results in Table 5  shows that the results in the study majority  of the respondents stated that integrity of employees is essential in ensuring transparency in an organization like UNBS this is also in line with Derek, (2000), who states that this is the quality of being honest and having strong moral principles. It implies not merely honest but fair dealing and truthfulness. This principle of integrity imposes an obligation on all accountants to be straight forward and honest in professional and business relationship.

The study shows that the respondents assert that Setting clear objective goals among all employees in an organization has a big impact on creating transparency in an organization like UNBS this is also in line with Reena et al, (2009), the principle of objectivity imposes the obligation on all professional accountants to be fair, intellectually honest and free from conflicts. This principle requires four basic needs of credibility, professionalism, quality of service and confidence.

The findings in the study shows that Encouraging professional competence among employees is essential in achieving transparency in an organization this is also in line with Posti (2005), who states a professional accountant, in agreeing to provide professional services implies that he is competent to perform the services. Accountants should refrain from agreeing to perform professional services which they are not competent to carry out unless competent advice and assistance are obtained.

Table 5 shows that  the respondents assert that Keeping an organization financial records confidential is key creating transparency in an organization this is also in line with  Farrington et al, (2006) who asserts that when the there is proper record keeping in an organization This is to blame for most of procurement fraud in the developing countries, maintaining a proper records of providers is vital and when organizations do not maintain a record of their providers they are prone to fraud.

5.1.2 Showing challenges of accounting in UNBS

Regarding results on Conflict of interest among organizational employees by organizations(20%)states that this one of the challenges facing accounting in UNBS, (22%) of the respondents state that Lack of job security among employees affects effectiveness of the system, (18%) stated that it is a poor record keeping of organizational records, (20%) indicates that poor payments of accounting employees and the (20%) of the respondents further state that Poor payments of accounting employees are one of the critical challenges facing accounting employees at UNBS.

According table 8 to the results in table above the findings in the study most of the respondents assert that Conflict of interest among organizational employees is one of the main challenges facing accounting in an organization like UNBS this is also in line with Lysons, (2006) who states that when the conflict of interest is one of the key drivers of corruption and mismanagement in an organization.

The results in the study shows that Lack of job security among employees affects effectiveness of the system this findings is also in line with Bailey, (2006) who asserts that employees in an organization need to be given job security so that they feel part of the system this will help in enabling the development of the employees in the system.

The study further shows that respondents hold the view that poor record keeping of organizational records is one of the challenges facing accounting in an organization Papadakis, (2003) who asserts that poor record keeping in an organization is one of the key determinant of organizational success at UNBS.

The results in the study shows that majority of the respondents state that poor payments of accounting employees is one of the main challenges faced by UNBS. This results also indicates that accountant need to be paid well to be effective.

The results from the study also indicates that Poor payments of accounting employees has big influence on their performance the findings also further state that because of poor payment of accounting employees at UNBS they have been unable to perform well.

5.1.3 Other factors affecting accounting operations

The results in study shows that majority of the respondents in the study asserted that Poor working environment for accounting staff of accounting staff is one of the main factors affecting accounting operations this is also in line with Thembile et al, (2005), who states that an employee may come under extreme financial stress, if she or he has health problems or family members are chronically ill. An employee may desire to solve a need or seek to attain a certain lifestyle. Possibly there may be gambling or alcohol-related problems. Unfortunately the manager cannot do much about such motives, but it is important that they are identified. Internal motives emanate from the workplace if an employee feels they are being underpaid, are unfairly treated in an appraisal interview, are given high volumes of work, leading to stress, and an employee perceiving that promotions are based on work politics and not performance.

The study shows that majority of the respondents stated Lack of required computers and software to perform accounting tasks is one of the main challenges facing accounting operations this is also in line with Lower (1998) who indicates that an effective control environment is where competent people understand their responsibilities, the limits to their authority, and are knowledgeable, mindful, and committed to doing what is right and doing it the right way. Jenny and Pamela (2006) assert that a governing board and management enhance an organization’s control environment when they establish and effectively communicate written policies and procedures, a code of ethics, and standards of conduct.

The results further indicates that political influence  has an influence on accounting efficiency in an organization this is also in line with Global integrity report 2008 which states that Political influence in accounting, in accounting is to blame for accounting fraud in most organization, , it has been noted that although there are penalties, Accounting process especially big accounting contracts tend to involve high profile politicians, who influence the process & therefore usually protect the individuals who may be implicated.

Control Activities, Craig (1999) states that control activities are the administrative and supervisory actions that management engages in to keep the organization focused and cautious in addition to keeping members effective and efficient at task execution. Dublin (1999) considers control activities as activities that provide evidence that a loss has occurred. They include; analysis, reconciliations, and reviews. He emphasized the importance of authorizations in the form of expenditures as a result of an approved budget as a control activity. Approval of budget expenditure should involve questioning of unusual items, justification of the transaction and review of source documents (Van Horne, 2002). Control activities are actions supported by internal control objectives, procedures and policies that enable managers to address risk timely, effectively and efficiently (Steeves, 2004).

The results in the study shows that Poor risk assessment of organizational activities  in an organization this is also in line with COSO (2004) considers risk assessment as the process of identifying and analyzing of relevant risks to the achievement of the entity’s objectives and determining the appropriate response. It includes risk identification from external and internal factors, at the entity and the activity levels, risk evaluation, assessment of risk appetite of the organization and the developing responses of all the risks in the organization.

The results in the study indicates that organizational level of record keeping is essential in ensuring accounting efficiency in an organization this is also in line with Farrington et al, (2006) who states that Organizational level of record keeping, This is to blame for most of accounting fraud in the developing countries, maintaining a proper records of providers is vital and when organizations do not maintain a record of their providers they are prone to fraud.

5.2 Conclusion

The results indicates that the various ways of ensuring transparency include;  ensuring Integrity among employees in an organization , Setting clear objective goals among all employees in an organization is essential in ensuring transparency, Encouraging professional competence among employees is key in the enforcing of transparency in an organization, keeping an organization financial records confidential is key in enforcing transparency in an organization and Ensuring that all employees in an organization follow the rules.

The results also indicates the following challenges include; Conflict of interest among organizational employees by organizations, Lack of job security among employees affects effectiveness of the system, poor record keeping of organizational records, poor payments of accounting employees and Poor payments of accounting employees are one of the critical challenges facing accounting employees at UNBS.

The findings also indicates that the following are the factors affecting accounting operations and they include; adoption of ethical standards , Poor working environment for accounting staff, Lack of required computers and software to perform accounting tasks, Poor risk assessment of organizational activities  in an organization and poor monitoring and evaluation.

5.3 Recommendations

The study recommends that organizations should ensure that there is integrity and objectivity amongst employees to enable them adopt ethical standards in organizational operations.

Organizations should also ensure that there is proper record keeping, limited political influence in organizations activities to encourage efficiency in accounting operations.

5.4 Areas of further study

The study recommends the following areas for further study;

1. Influence of technology in accounting efficiency
2. Challenges with manual systems of accounting

• Benefits of employee motivation on performance.

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APPENDIX I: QUESTIONNAIRE

TOPIC: THE ROLE OF ACCOUNTING IN FINANCIAL TRANSPARENCY

A CASE STUDY: UGANDA NATIONAL BUREAU OF STANDARDS

Dear respondent

I am NAMUDDU VIOLA a student of Kyambogo University, am carrying out a study on the above stated topic. You are one of the respondents randomly selected to participate in the study. The information given shall be treated with utmost confidentiality and shall only be used strictly for academic purpose.

GENERAL DATA

SECTION A:            

• Gender: Male              female

• Age a) 18 -29 b) 30 – 39 c)  40 and above

3. Educational level

Master’s degree           Bachelor’s degree                   diploma                       others

4. For how long have you been working with Uganda National Bureau of Standards?

1. a) 3-5 years

1. b) 6-10 years c) 10 above

SECTION B: Various ways of ensuring transparency

What are the various ways of ensuring transparency?

1. …………………………………………………………………………………………
2. …………………………………………………………………………………………

• …………………………………………………………………………………………

1. …………………………………………………………………………………………
2. …………………………………………………………………………………………
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• …………………………………………………………………………………………

SECTION C:   Different Challenges of accounting

What are the different challenges that affect accounting?

• …………………………………………………………………………………………

1. …………………………………………………………………………………………
2. …………………………………………………………………………………………
3. …………………………………………………………………………………………

• …………………………………………………………………………………………
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• …………………………………………………………………………………………

SECTION D: Other factors affecting accounting operations

What are the other factors affecting accounting operations?

1. …………………………………………………………………………………………
2. …………………………………………………………………………………………

• …………………………………………………………………………………………

1. …………………………………………………………………………………………
2. …………………………………………………………………………………………
3. …………………………………………………………………………………………

• …………………………………………………………………………………………

THANKS FOR YOUR COOPERATION

APPENDIX TWO: TIME FRAME

APPENDIX THREE:  BUDGET ESTIMATES

APPENDIX FOUR